Grab's not yet profitable, but investors may give it 'leeway' to invest in new growth areas, analysts say

cnbc2021-04-14

KEY POINTS Grab on Tuesday announced it will go public through a SPAC merger with Altimeter Growth Corp., in a deal that will value the ride-hailing company at $39.6 billion. The company as a whole ...

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Comments

Khairul0802
2021-04-15
Khairul0802
Interesting
Jazling
2021-04-15
Jazling
Comment back pls
Jsiong
2021-04-14
Jsiong
What's grab's future?
TLC88
2021-04-14
TLC88
It has ewallet and digital bank license, which will be upcoming trend..
Xanpai
2021-04-14
Xanpai
[呆住] [財迷]
samfernando
2021-04-14
samfernando
May Grab be the face of ASEAN

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Davidson analyst Tom White.\n\nSINGAPORE — Investors will be keeping a close eye on when Grab will turn profitable after itsrecord-breaking SPAC listing, according to Tom White, senior research analyst at D.A. Davidson.\n\"There's obviously a growing scrutiny from investors about a path to profitability,\" White told CNBC's \"Squawk Box Asia\" on Wednesday. But there has been a shift in investor sentiment from a singular focus on growth and market share gains to a more balanced approach, he said.\nWhile still focused on breaking even, investorswill likely also give the Southeast Asian ride-hailing firm more leeway to invest in new product categories, said White.\nSingapore-headquartered Grab announced on Tuesday it will go public through a SPAC merger with Altimeter Growth Corp.— a deal set to value the ride-hailing company at $39.6 billion. It was the world’s largest blank-check merger involving special purpose acquisition companies, which are set up to raise money to buy over private companies such as Grab.\nPath to profitability\nGrab as a whole is still not profitable. It lost $800 million in 2020 on an EBITDA basis and projected a $600 million loss for this year,according to a regulatory filing.\nEBITDA — a measure of overall financial health for a business — stands for earnings before interest, taxes, depreciation and amortization. It is acommon earnings metric used by tech companies even though seasoned investors are skeptical about it.\nGrab said EBITDA for its transport segment turned positive since the fourth quarter of 2019. Adjusted net revenue last year came in at $1.6 billion and is projected to jump to $4.5 billion in 2023 — Grab predicted it might generate $500 million of EBITDA in two years.\n“They do have, I think, a nice story to tell when you look at the two core segments,” said White, who also covers other online ride hailing and delivery apps likeUberandDoorDash.\n“All their markets in ride sharing are at least EBITDA profitable, so, presumably, not burning cash. Five out of the six markets for food delivery are EBITDA profitable as well,” he said.\n“Grab, I think, is going to be given a fair bit of leeway from the market to invest in new adjacencies, new categories, new products, given how well they’ve executed in the two legacy offerings,” White added.\nBuilding up scale\nLoss-making is a function of trying to acquire market share, said Sachin Mittal, a senior vice president at Singapore’s DBS Bank. That’s especially so given the current market environment where cheap capital is readily available, and can help companies build scale and lower costs, he added.\n“So you have to be that player who kind of gains the market leadership, builds up scale, lowers the cost —and ultimately, when the money is not so cheap, that is when you can be profitable instantly because you’ve built that scale,” he told CNBC’s “Street Signs Asia.”\nMittal added that investors may also be attracted enough to pay a premium for Grab’s market dominancein areas like food delivery. Investing in the stock would also expose them to the financial technology scene in Southeast Asia, he said.\nOne of Grab’s key business is the financial services segment, which includes digital payments, lending, insurance, digital banking and wealth management.\nThe company has yet to prove its market leadership in fintech — unlike in ride-sharing and food delivery —and this segment will likely be a high-growth, cash-burning business in the near term, according to Mittal.\n“Hence, this whole listing will raise funds and those funds can be deployed towards fintech,” he said.\nAs part of the SPAC merger, SoftBank-backed Grab will receive about $4.5 billion in cash, which includes $4 billion in a private investment in public equity arrangement, managed by BlackRock, Fidelity, T. Rowe Price, Morgan Stanley’s Counterpoint Global fund and Singapore state investor Temasek.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":347837944,"gmtCreate":1618482905888,"gmtModify":1704711516620,"author":{"id":"3573174299397007","authorId":"3573174299397007","authorIdStr":"3573174299397007","name":"Khairul0802","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":1,"crmLevelSwitch":0,"idStr":"3573174299397007"},"htmlText":"Interesting","listText":"Interesting","text":"Interesting","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/347837944","repostId":1157656344,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":344789975,"gmtCreate":1618443634297,"gmtModify":1704710843988,"author":{"id":"3566821013640470","authorId":"3566821013640470","authorIdStr":"3566821013640470","name":"Jazling","avatar":"https://static.tigerbbs.com/85e0a83573d9307f57fca9b2baed72af","vip":1,"crmLevel":5,"crmLevelSwitch":1,"idStr":"3566821013640470"},"htmlText":"Comment back pls","listText":"Comment back pls","text":"Comment back pls","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/344789975","repostId":1157656344,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":344256163,"gmtCreate":1618411739552,"gmtModify":1704710482897,"author":{"id":"3579770956968787","authorId":"3579770956968787","authorIdStr":"3579770956968787","name":"Jsiong","avatar":"https://static.tigerbbs.com/24f564dd0693f54756caa692d38169d7","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3579770956968787"},"htmlText":"What's grab's future?","listText":"What's grab's future?","text":"What's grab's future?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/344256163","repostId":1157656344,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":344226978,"gmtCreate":1618411209094,"gmtModify":1704710467963,"author":{"id":"3579644221346646","authorId":"3579644221346646","authorIdStr":"3579644221346646","name":"TLC88","avatar":"https://static.tigerbbs.com/70e92e6f93d89c4be15661304799bff0","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3579644221346646"},"htmlText":"It has ewallet and digital bank license, which will be upcoming trend..","listText":"It has ewallet and digital bank license, which will be upcoming trend..","text":"It has ewallet and digital bank license, which will be upcoming trend..","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/344226978","repostId":1157656344,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":344220594,"gmtCreate":1618410985818,"gmtModify":1704710462244,"author":{"id":"3574493331025980","authorId":"3574493331025980","authorIdStr":"3574493331025980","name":"Xanpai","avatar":"https://static.tigerbbs.com/1404507036c15c65bd9510e63c95e668","vip":1,"crmLevel":2,"crmLevelSwitch":0,"idStr":"3574493331025980"},"htmlText":"[呆住]&nbsp;[財迷]&nbsp;","listText":"[呆住]&nbsp;[財迷]&nbsp;","text":"[呆住] [財迷]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/344220594","repostId":1157656344,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":344630384,"gmtCreate":1618404428648,"gmtModify":1704710267290,"author":{"id":"3577774343761638","authorId":"3577774343761638","authorIdStr":"3577774343761638","name":"samfernando","avatar":"https://static.tigerbbs.com/a0364524ada7527bd96fee8e8676450a","vip":1,"crmLevel":4,"crmLevelSwitch":0,"idStr":"3577774343761638"},"htmlText":"May Grab be the face of ASEAN","listText":"May Grab be the face of ASEAN","text":"May Grab be the face of ASEAN","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/344630384","repostId":1157656344,"repostType":4,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":16,"commentSize":14,"repostSize":0,"favoriteSize":0,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; 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